To:     Trade Ministers and Agriculture Ministers
CC:     Pascal Lamy, Director-General, WTO
    Robert Zoellick, President, World Bank
    Dominique Strauss-Kahn, Managing Director, International Monetary Fund
Angel Gurría, Secretary General, Organization of Economic Cooperation and Development (OECD)


Subject:     The WTO’s Doha Round Will Not Solve the Global Food Crisis – Time for Real Solutions


Dear Minister,

The global food system is in crisis. Millions of people can no longer afford or access the food they need, increasing global hunger and malnutrition.  The worlds’ governments need to act now. But the answer does not lie in deeper deregulation of food production and trade. We, concerned non-governmental organizations and social movements, urge you to reject the claims by the leaders of the World Trade Organization (WTO), World Bank, the International Monetary Fund (IMF) and the Organization of Economic Cooperation and Development (OECD), that concluding the Doha Round is a solution to the current crisis.1

We believe the Doha Round as is currently envisioned will intensify the crisis by making food prices more volatile, increasing developing countries’ dependence on imports, and strengthening the power of multinational agribusiness in food and agricultural markets. Developing countries are likely to lose further policy space in their agriculture sector, which would in turn limit their ability to deal with the current crisis and to strengthen the livelihoods of small producers.

The inability to manage the current food crisis is an illustration of the failure of three decades of market deregulation in agriculture. We need a new model for the trading system that puts development, employment and food security objectives at the centre. We are calling for real solutions that will stabilize food production and distribution to meet the global demand for healthy, adequate, and affordable food. Governments must start to take a long-term view of the challenges facing agriculture. The recent report of the International Assessment of Agricultural Knowledge, Science and Technology for Development [IAASTD], endorsed by 60 countries, says, “Modern agriculture has brought significant increases in food production. But the benefits have been spread unevenly and have come at an increasingly intolerable price, paid by small-scale farmers, workers, rural communities and the environment”. Support has to be directed at a different model of agriculture that can sustainably meet the needs of a growing population.

The WTO’s Doha Round and other bilateral and regional trade agreements currently under negotiation will not solve the food crisis, for the following reasons:

1. Existing WTO and bilateral and regional trade agreements push across the board liberalization, which worsens volatility of food prices. This leads to increased dependence on international markets and decreased investment in local food production. Trade liberalization has eroded the ability of a number of developing countries to feed themselves, for example, Mexico, Bangladesh, Indonesia and Mali. The removal of tariff barriers has resulted in dumping of heavily subsidized commodities in developing countries, such as Ghana, Kenya, the Philippines, Jamaica and Honduras, while undermining local food production.

Developing countries have turned from net exporters of food to net importers of food.2 Two-thirds of developing countries are net food importers and are extremely vulnerable to volatile world food prices. The current proposals under the Doha Round will increase countries’ dependence on food imports while further eroding their ability to feed their own populations.

2. High food prices provide enormous benefits to transnational agribusinesses and commodity cartels that control the trade in food and agriculture. One of the largest global grain traders, Cargill, announced in April 2008 that its third quarter profits rose 86 percent to US$1.03 billion, in the midst of the global food crisis.3 Bunge saw its profits in the last quarter of 2007 increase by 77 percent compared with the same period in 2006. Archer Daniel Midland’s (ADM’s) profits in 2007 rose by 65 percent.4 The Doha Round will strengthen the position of transnational companies in agricultural markets, who thrive on market deregulation.

3. The Doha negotiations do not tackle the major challenges facing the global food system, which include climate change, natural resource depletion, the quadrupling of oil prices, the lack of competition in world commodity markets, financial speculation and the rapid expansion of unsustainable agrofuels production.


We believe what is needed to solve the food crisis is the following:

1. Governments and communities need to have a range of tools at their disposal to build resilient food and agricultural systems that are ready for the challenges that lie ahead. This includes a greater emphasis on policies that increase food sovereignty, encourage local investment in local markets, support sustainable small-scale farming, safeguard local production from dumping, implement genuine agrarian reform, and allow trade instruments such as quotas and tariffs. Some of these instruments are being proposed by a group of 46 developing countries—known as the G33—in the WTO’s negotiations on Special Products and Special Safeguard Mechanism.

2. The volatility of agricultural prices must be addressed through national policies and global actions to avert food crises and to ensure small producers a reliable and steady income. Well-managed public stocks need to be re-established. Such stocks provide an important buffer against price volatility and food insecurity. Speculation and extremely high prices forced upon consumers by traders and retailers must be controlled. At the WTO, the African group has a long-standing proposal on the need to allow commodity-producing countries to make agreements among themselves in order to stabilize prices. This proposal deserves further attention.

3. Governments should establish safety nets and public distribution systems to prevent widespread hunger. Governments have to provide financial support for the poorest consumers to allow them to eat. Governments must use the maximum of available resources within the State and from the international community.

4. A reform of the food aid system to respond more rapidly and to allow greater flexibility in the delivery of food aid. Instead of dumping surplus agricultural production as “in kind” food aid, donors should provide cash to governments and aid agencies to buy local food.

5. Developing countries should not commit to financial services liberalization in the context of the General Agreement on Trade in Services (GATS) or bilateral and regional trade negotiations, as this can adversely impact farmers’ access to financial services such as insurance and credit.

We look forward to discussing these issues further with you, and to seeing real solutions to the global food crisis.

Sincerely,

International and Regional Networks
------------------------------------------------------------------
1 At the WTO’s General Council and Trade Negotiating Committee (TNC), the Director-General, Pascal Lamy, said “we have all witnessed the financial turbulence we are in and the hikes in energy and food prices that are affecting severely many of your countries. At a time when the world economy is in rough waters, concluding the Doha Round can provide a strong anchor.” Mr. Lamy has argued that the continuous expansion of multilateral trade is an insurance policy against market instabilities and financial turbulences. The President of the World Bank and former U.S. Trade Representative, Robert Zoellick, argued in a speech at the Center for Global Development, that a key solution to the food crisis “is to break the Doha Development Agenda impasse.” He said, “A fairer and more open global trading system for agriculture will give more opportunities – and confidence – to African and other developing country farmers to expand production.” Similarly, Dominique Strauss-Kahn, Managing Director of the IMF, wrote in an opinion in the Financial Times, “no one should forget that all countries rely on open trade to feed their populations. […] Completing the Doha round would play a critically helpful role in this regard, as it would reduce trade barriers and distortions and encourage agricultural trade.” Finally, the Secretary General of the OECD, Angel Gurría, wrote in an opinion piece in the International Herald Tribune, “Governments around the world face weakening economies and soaring food prices. Amid the hand-wringing, an important and immediate step they can take to help would be to agree on a new multilateral trade deal.”
See http://www.wto.org/english/news_e/news08_e/gc_chair_tnc_7may08_e.htm;
http://www.wto.org/english/news_e/news08_e/tnc_17apr08_e.htm; http://www.wto.org/english/news_e/sppl_e/sppl88_e.htm; http://www.wto.org/english/news_e/sppl_e/sppl85_e.htm; http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21711307~pagePK:34370~piPK:42770~theSitePK:4607,00.html; Financial Times, COMMENT: A global approach is required to tackle high food prices, By Dominique Strauss-Kahn, Apr 21, 2008; International Herald Tribune, Trade Agreement Needed Now, By Angel Gurría, April 25, 2008
2 A food trade surplus of US$1.9 billion in the 1970’s was transformed into a US$17.6 billion deficit in 2000 and a US$9.3 billion deficit in 2004. Excluding Brazil, the figures are even more drastic: A food trade surplus of US$1.6 billion was transformed into a deficit of US$26.1 billion by 2004. The cereal import bill for low-income food deficit countries in 2007 reached over US$38 billion. According to FAO projections, by the year 2030, the net food trade deficit of developing countries is expected to swell to more than US$50 billion.
3 Cited in The Star Tribune
4 Making a Killing from Hunger, Grain, April 2008